LOS ANGELES
www.dailyjournal.com
TUESDAY, MARCH 22, 2016
PERSPECTIVE
Tips for lawyers looking to land in Havana
By William Hochberg
A
mericans seeking to
cash in on Cuba in light
of President Barack
Obama’s recent relaxation of
U.S. embargo regulations should
heed Teddy Roosevelt’s advice
and speak softly (preferably in
Spanish) while carrying a big
stick (USB, that is, as Wi-Fi access is scarce on the island).
President John F. Kennedy’s
1960 executive order imposed
the general embargo shortly after
Cuba nationalized oil refineries,
and about six months before the
failed invasion at the Bay of Pigs.
Five decades later Cubans of
all ages, from the generation that
won the Revolution to the smart
and ambitious younger crowd,
express hunger for change, but
their government remains cautious. So should Americans planning to transact business there.
For example, a lawyer, entrepreneur or manager attempting
to conduct deals in Cuba without
first obtaining a special license
from U.S. Treasury’s Office
of Foreign Assets Control and
sometimes also permission from
the U.S. State Department, could
still face penalties. And U.S. anti-bribery laws must be carefully
understood.
Nonetheless, Obama’s four
rounds of reforms enacted between Dec. 17, 2014, and March
16, 2016, are sweeping and greatly relax the embargo, encouraging Americans to visit and do
business on the island. For instance, the new embargo rules
allow:
• U.S. citizens to profit from
entertainment and sports ventures
in Cuba, like the Rolling Stones
concert promoted by a U.S. com-
New York Times
Obama and Cuban President Raul Castro at the Palace of the Revolution in Havana,
Cuba, on Monday.
pany, AEG Concerts West, as
well as recent and future concerts
by a host of U.S.-based artists.
Previously, any profit had to be
given to charity;
• Cubans to make money in the
U.S., including baseball players
who will no longer be required
to either turn over most of their
income to the Cuban government
or defect in order to take a lucrative U.S. team’s offer. Time will
tell whether Cubans will one day
take up more dugout space than
their Dominican compadres who
have had this financial freedom
for decades;
• Banks to conduct transactions
involving Cuban goods, services
or entities to be conducted in U.S.
dollars, whereas before investors
and banks could only base transactions on Euros or other foreign
currencies. U.S. banks are now
authorized to process U-turn
transactions in which Cuba or a
Cuban national has an interest,
allowing transfers from a bank
outside the U.S. that pass through
one or more U.S. financial institutions before being transferred
to a bank outside the U.S., where
neither the originator nor the beneficiary is a person subject to U.S.
jurisdiction;
• Anyone to visit the country on
their own “people-to-people” exchange. While the tourist market
is still closed, some hope Obama
will open up U.S. tourism soon.
In the meantime, the new reforms
allow anyone to go to Cuba without an expensive tour offering
so-called “people-to-people exchanges,” as long as the visitor
(1) has a “general license,” which
is a simple document drafted by
the visitor herself or her lawyer
(or a knowledgeable travel agent)
and (2) keeps records of all financial transactions for five years;
and
• U.S. attorneys to represent
Cuban nationals in a matter before a tribunal anywhere in the
world. While the new rules allow
attorneys to go before courts,
arbitrators and other tribunals
on behalf of Cubans, the law is
unclear as to whether a U.S. attorney could be retained for commercial, entertainment, sports or
other transactional matters without a special license, which entails an application process and
sometimes lengthy bureaucratic
delays.
Another key embargo reform
that predates Obama’s latest executive orders is the so called
“Berman Amendment,” a 1988
reform that allows U.S. citizens
to purchase Cuban artwork, musical recordings and other “information” in Cuba. Named for
its sponsor former Rep. Howard
Berman (D-CA), the Berman
Amendment defines “information” broadly. However, it appears that such transactions may
only involve artwork or “information” that was fully in existence at
the time of the transaction. So, a
U.S. citizen or company may not
commission a Cuban national to
create artwork, books, or musical recordings under the Berman
Amendment.
Overall, the embargo appears
to be slowly sinking into the
Straits of Florida somewhere
between Key West and Havana,
thanks to Obama, Berman and
others. But while Obama’s actions push the envelope, he is still
restrained from terminating the
embargo, which requires a repeal
of the legislation by Congress.
The U.S. presidential election
raises questions about the durability of the Cuban-American
détente. Could a new president
opposed to ties with Cuba build
a sea wall? And who would pay
for it?
“If a democrat is in the White
House, then we won’t see any
changes to these executive actions,” says Lee Ann Evans, senior
policy advisor at Engage Cuba,
a coalition of private companies
and organizations working to end
the travel and trade embargo on
Cuba. “Ted Cruz has said he will
reverse all of the Obama reforms,
but what we are trying to do now
is to get so much engagement
with Cuba by U.S. businesses
and people that even if someone
like Ted Cruz got into the White
House, the momentum and support for lifting the embargo will
make it virtually impossible to
reverse course.”
On the Cuban side, President Raul Castro has in recent
years enacted surprisingly liberal changes, as private citizens
may now buy homes and open
private businesses. Reportedly,
there are about 20 top notch private restaurants in Havana today.
The author visited some recently
and found them to be excellent by
world standards. Most hotels and
restaurants are still owned by the
government.
The laws of the U.S. and Cuba
regarding sanctions and the embargo are complex. The original
Kennedy embargo of 1960 focused on banning most exports
from Cuba, and a series of later
acts added more restrictions, in-
cluding the Foreign Assistance
Act of 1961, the Cuban Assets
Control Regulations of 1963, the
Cuban Democracy Act of 1992,
the Helms-Burton Act of 1996,
and the Trade Sanctions Reform
and Export Enhancement Act of
2000. Other statutes that are not
aimed specifically at Cuba but
can come into play for the unwary entrepreneur doing business
there include the Trading with
the Enemy Act of 1917 and the
Foreign Corrupt Practices Act of
1977. In addition to compliance
with all required State, Treasury
and Commerce department regulations and protocols, full compliance with the FCPA is an absolute and obvious requirement
of any business activity in Cuba.
The FCPA is known primarily for
two of its main provisions, one
that addresses accounting transparency requirements under the
Securities Exchange Act of 1934
and another concerning bribery
of foreign officials. Failure to
meticulously and systematically
comply with the FCPA can result in not only civil but criminal
penalties.
In a recent appellate case, U.S.
v. Esquenazi, 752 F.3d 912 (11th
Cir. 2014), the court affirmed 15and seven-year jail sentences for
two Florida entrepreneurs whose
US company purchased phone
time from foreign vendors and resold the minutes to U.S. customers. The trial court determined
their offering of a side payment
to a Haitian telecommunications
company constituted an illegal
bribe. Although the Haitian company was not owned outright by
the Haitian government, it was
deemed an “instrumentality” of
the Republic of Haiti.
In Cuba, even more than in
Haiti, businesses that may seem
to be privately held are often in
some degree under the control
of, or owned by, the Republic
of Cuba. While there has been
a chronic history of corruption
at many levels of government
and in the private sector, Cuba
is making efforts to prevent corruption. Any activity or even
communications
concerning
Cuban business with even an appearance of impropriety is to be
absolutely avoided.
The American entrepreneur or
lawyer trying to conduct business
in Cuba should strategize carefully, like Teddy Roosevelt who led
the Battle of San Juan Hill near
Santiago de Cuba in 1898, liberating the island from Spanish
dominion. Careful attention to
developments in U.S. and Cuban
law is a must. Speaking a bit of
Spanish and carrying some high
density USB sticks can also help
you go far in Cuba..
William I. Hochberg specializes
in music and media law at Greenberg Glusker Fields Claman &
Machtinger LLP.
WILLIAM HOCHBERG
Greenberg Glusker
Reprinted with permission from the Daily Journal. ©2016 Daily Journal Corporation. All rights reserved. Reprinted by ReprintPros 949-702-5390.